Plantation investments get tax boost

The FederalGovernment has offered Australia’s plantation forestry managed investment industry a major tax concession in a move that is expected to breath new life into the sector.

The new 12-month prepayment concessions will allow growers in managed investment plantations to obtain an immediate tax deduction for funds contributed by investors in one financial year for seasonally dependent plantation work that growers carry out in the following financial year.

Previously, ever since a similar concession, the 13-month prepayment rule, was withdrawn in 1999, growers have been able to claim deductions only for funds sourced from investors and used to carry out plantation work all in the one year.

The Minister for Forestry and Conservation, Wilson Tuckey, announced the policy change after intense lobbying efforts by the plantation forestry industry, which has seen investments in the sector drop by up to two-thirds in the 2000/01 financial year following the abandonment of the 13-month rule.

The Australian forest growing industry welcomed the new tax rule last week, despite having to agree to a significant trade off to prevent a slide in the government’s tax revenue.

The trade off means that managed investment plantation companies that offer the 12 month prepayment option will be required to bring forward any related tax liabilities to match the year when growers claim their deductions.

“The pre-payment arrangement outweighs the cash flow penalty of bringing forward the tax liability,” the Australian Forest Growers association executive director Alan Cummine says.

“We are hopeful and expectant that it is going to restore confidence and reverse the decline in the investment that has happened in this sector in the last financial year.”